that process to show it can be done. by increasing that percentage to .55% over the biennium. that will generate $110 million in new transportation maintenance dollars. let me put it in perspective. that amount, $110 million is 1/8 of 1% of an $85 billion budget. the largest in the history of virginia. so i say to you, if we can't find the resolve to use 1/8 of 1% of the budget for additional transportation maintenance funding, then we are not serious about maintaining our transportation infrastructure in virginia. we will also propose some other reforms to virginia department of transportation and reduce timelines for construction and other things to make our road building projects go smoother. we will reform and promote new expansions in the port of virginia.

a great asset for us that can be a global leader in international shipping, and the growing space port on the eastern shore. i think it is also time that we address head on, ladies and gentlemen, the hard realities of our woefully underfunded state retirement system. as of the june valuation, the funding status of the system was 70% for state employees and 66% for teachers. you read the j. lark report. they said the numbers will go to 63 and 61% respectively in 2013. that's unsustainable. i do not want to pass this problem on to another governor. you should not want to pass this on to another general assembly. i say to your our responsibility in vrs is clear. that is why i propose the largest employer contribution to the virginia retirement system in history. recommending $2.21 billion in

total funding for the systems for state employees and teachers, including $886 million from the state general fund. now this more than doubles the amount that we put in the retirement system in the last budget. the state is now going to do its part. localities will have to fund their share of the teachers retirement. since teachers are local employees. and local governments have the duty to fund their share of the system. doing the right thing at the state level is not an unfunded mandate on our localities. the rates have been set and the bills are now due. in this new state cash infusion will not fix the problems with the retirement system. to ensure a stable retirement system in the decades ahead, state employees who really do a phenomenal job for us every day,

will be asked to accept some changes and adjustments to the vrs plan. in the days ahead, i will announce a number of very specific vrs reform proposals to ensure a long-term solvency of the system and i look forward to working with you to enact some of those this session. i also want to continue the success we found in bringing private sector management incentives to state government. you remember in 2010 working together, we enacted a 3% performance bonus for state employees, contingent upon them afrp chooefing a specific amount of savings in their agencies by the end of the year. it worked. their great efforts saved taxpayers over $90 million after the bonus payment was made. that's good government. so, i'm asking you to do that again this year.

i proposed another 3% one time bonus for the state employees in december of 2012. contingent upon a specific amount of savings being achieved and employees individually meeting specific performance measures on the performance reviews. this will again reward good performance. last summer, we all collectively held our breaths as we watched the debt limit fight in washington. today, we face a volatile euro and international unrest. i would say to you that uncertainty for us is now the new certainty. while we cannot control what congress or what europe do, we must prepare as well as possible here in virginia for the future changes that are certain to come. so that's what i try to do in the introduced budget. the budget i proposed does not raise taxes, but forces state government to set priorities.

live within its means and plan for the future. something i wish our federal government would also do. [ applause ] >> so i'm asking you this year to put $50 million from a newly created contingency trust fund or f.a.c.t. fund. this fund will help us handle impacts from necessary and future federal spending cuts and take prudent action to help our economy on defense in federal-related spending. i'm proposing we enhance our cash reserves by doubling the rainy day fund to $600 million by the end of 2014. we will also eliminate the

accelerated sales tax policy this session from 96% of all merchants by allocating by 2012. my goal is to get rid of that unfair policy before i leave office but not before. together, these budget strategies provide structural balance. they reduce unfunded liabilities and invest in job creation, in transportation and in higher education. these ideas were well received last friday when i traveled to new york with your money committee leaders to meet with all three bond rating agencies. to continue building a commonwealth of opportunity, i'll also be asking your partnership in some other critically important areas of government. this budget provides $5 million for additional land conservation to continue our bipartisan effort to conserve more open space to protect the environment. we have already been able to add in the last two years, 100,000

acres of land to the protected status category during the last two years. we are making progress in restoring the great jewel that is the chesapeake bay. striped bass production was at an all-time record in 2011. some of you told me you caught a few. the blue crab population is at its second highest level since 1997 and even eagle populations are up in the bay watershed. the recent budget surpluses have allowed us to contribute over $85 million to improving water quality. this means more assistance to virginia farmers and a significant contribution to the water quality improvement fund. providing for public safety is one of the top duties of government at every level. if people aren't safe and secure in their neighborhoods, businesses won't relocate there and our communities will not prosper. thanks to some of the smart

policies that we all approved together over the years, and the selfless service of first responders and law enforcement officers like derek and mike, crime recidivism are actually down in virginia. you know we face challenges. repeat drug dealers are a major perpetual cause of crime. so this year, i'm proposing tough new laws to put away repeat drug dealers for longer periods of time. i put the money in the budget to make sure we can accomplish that. because if these dealers are behind bars, they can't sell drugs to our kids, they can't steal from their neighbors and s stolen the lives of too many virginians. we can break that cycle when we combine tough sentences with other effective policies.

so this year in the budget, i provided localities with a mechanism for obtaining authorization of the new drug courts at their expense. as long as they provide data to evaluate their success. for those that are released from prison who learned from their mistakes and want to be productive citizens. we'll provide them greater positive opportunities for change through more effective prison-to-reentry policies. we are a remarkable nation of second chances. over 90% of all offenders that we incarcerate get out of prison. they will be back on the street. we don't want them to go back to prison. what we want is more good citizens and fewer victims. this year's budget maintains critical 599 funding for local law enforcement. fully funds our sheriffs and adds 40 new slots in our future state trooper schools. a more secure society is also a

more prosperous society. now we're going to step up our efforts to make virginia the energy capital of the east coast. now that starts with pursuing an all of the above red, white and blue approach to energy. using all of our own natural resources here in virginia. more domestic energy production equals more job creation and security. something we all should support. an important part of the energy solution is right here in virginia. just 50 miles off the shores are oil and gas deposits that can be accessed in a responsible manner. you all remember we passed legislation in 2010 with strong bipartisan support approving offshore drilling. america needs the energy and virginians need the jobs. [ applause ]

>> so i am urging the obama administration to end the delays and act now to include virginia in the outer continental shelf plan. i want to thank senators warner and webb for leading that fight in our nation's capitol. we must continue to demand the federal government stop the overreach and overregulation of our important job creating coal and natural gas industries here in virginia. [ applause ]

>> and congress must also act to revitalize the nuclear industry, which capital is in lynchburg, virginia by setting policies on the storage and disposal of fuel rods after 30 years of inaction. we will also pursue the development of alternative sources of energy, like wind and solar and biomass, as long as they are competitive for our consumers. in october we had an exciting announcement. the nation's first facility for testing of large offshore electricity wind producing wind turbines will be developed on the eastern shore. offshore. that is why i included $500,000 in the fy 13 budget to accelerate and assist private development of the virginia wind energy area. we are also evaluating some very

meritorious private sector propose as to move the substantial vehicle fleet to alternative domestic fuel sos we can reduce our reliance on foreign sources of oil. it will create more jobs and revenues for our citizens. we must also continue to reform state government and make it more efficient and more effective or, as mr. jefferson said, more wise and frugal. over the past decade, state spending has grown 23% faster than the rate of growth and population inflation according to the l. lack report. i'm proposing we close the prison, cut ineffective programs, abolish unnecessary boards and commission, end memberships in outside organizations and make our government work smarter.

[ applause ] >> and this is the session, ladies and gentlemen, where we should honor our founders by putting into our state constitution a strong property rights amendment to protect the private property of every virginian. we will continue our recent work to dramatically improve funding for individuals with intellectual and developmental disabilities as well. [ applause ] >> last year together, we invested $60 million in new funds to strengthen community care capacity. i authorized 60 new home and community-based waiver slots, specifically for individuals

ready to transition from institutions back to the community. i want to thank delegates kirk cox and delegate kirk jones for their leadership. in the budget i'm recommending another $30 million in health funding because we must transition more individuals from institutions to community-based kaer. it's the right thing to do, for them and for their families. [ applause ] >> medicaid funding has increased 1,600% over the last 29 years. during the 2011 session, substantial ways to improve the quality, cost effectiveness and integrity of the medicaid program were enacted. thank you. we're now moving forward with a statewide adoption of care coordination. this will allow state government to better manage our medicaid

expenditures while ensuring virginians receive the high-quality health care that they need. you arrive here tonight, ladies and gentlemen, in i think a particularly pitiful time in the life of virginia and the life of our nation. the world around us is changing with incredible speed. gone are the old regimes in iraq and libya and egypt and india. facebook and twitter replaced texts which replaced e-mails which replaced phone calls. iphones rule. products and procedures get obsolete quickly. even one-term governors, but not too quickly. in the midst of all this uncertainty and structural change, i think virginians want

government to provide stability by funding and providing its core services well. they want good jobs. they want safe neighborhoods. they want successful schools. they want a modern transportation system. a clean environment and strong families, and just an' yaul opportunity to achieve the american dream. we are a nation that rightly guarantees equal access to opportunities. we don't guarantee outcomes. that's why we're a free people. that's the kind of government that was enshrined in law here in virginia over two centuries ago. it has made this united states the most prosperous nation the world has known. which we're blessed to be americans. in the mid 1840s and '50s, during the irish potato famine, millions of my irish heritage

fled ireland for the united states. hoping for survival. in the galleys of the ships that sailed from the ports in england and ireland in places like dublin and cork, the irish government posted bulletins with the heading, "advice to irish immigrants." the posters read, "in the united states, wealth is not idolized, but there is no degradation connected with labor. an industrious youth may follow any occupation without being looked down upon, and he may rarnlly expect to raise himself in the world by his labor." over 100 years ago, this man, that same promise of america led my grandfather to come to ellis island and then massachusetts in search of his own dreams and pursuit of his own opportunities.

that, to me, typifies the america and virginia we all believe in. that's the america that we are blessed to call home. over the next 60 days, our job is to enact policies to ensure this remains a robust commonwealth of opportunity where any man or any woman of any race or any creed, from any beginning and any place, will always have the opportunity to raise themselves up in the world by their god-given talents and their labor. [ applause ] >> so working together, i know we will do that. so thank you all for your work together this session and may god continue to shower his blessings on this great commonwealth of virginia. thank you. [ applause ]

the nations governors are headed to washington, d.c. this week toned attend the winter meeting of the national governors association. our live coverage picks up

saturday at 10:00 a.m. eastern with the opening news conference. we'll also show you a discussion on growing state economies. sunday our coverage starts at 9:30 a.m. eastern with a look at education and early childhood issues. the nations governors will also talk about hunger and the changing role of the national guard and we'll wrap things up on monday at 9:00 a.m. eastern with the closing session featuring nga president dave hide man, nebraska's republican governor. join us later for more from "american history tv." the focus tonight is on the u.s. space program. at 8:00 it's gene kranz on his experiences as nasa's flight admissions flight director. at 8:30 we'll hear from john glenn, michael collins, neil armstrong and buzz aldrin. an hour later, a nasa film about

the life and exploits of john glenn. know more state of the state speeches with maryland governor martin o'malley. his address is 33 minutes. >> thank you very much. thank you all very, very much. let me begin by thanking god for the goodness of maryland, for her natural beauty, for the goodness of her people, for the hope that we see in the eyes of each of our children. let me also begin by thanking the men and women of maryland who serve in our country's armed forces.

[ applause ] >> i also at the outset want to thank the parents and the loved ones of our fallen heroes for the sacrifice that they have made and that they continue to endure. thank you, governor glendening and governor hughes for your continued service on behalf of the people of maryland. thank you, president miller and, and speaker xwush for so annually and effective live leading your respective chambers through these very challenging and difficult years of recess n recession. [ applause ] -- through these challenging years of recession and now jobs

recovery. thank you attorney general gansler, thank you treasurer kopp, controller fran show for your work in protecting the dignity of every individual and in advancing the common good. and thank you to my colleagues in county and municipal government who have battled nobly on the front lines of our jobs recovery and the defense of our quality of life in these extremely challenging times. thank you to the men and women of law enforcement, correctional officers, parole and probation, juvenile service agents, committed u.s. attorneys and states attorneys throughout our state whose hard work has driven violent crime down to the lowest levels in 30 years. [ applause ] >> thank youroll links blake fos extraordinary leadership in saving lives and driving violent crime down to record lows.

[ applause ] >> thank you and welcome to ambassador arturo sarukan of mexico, ambassador michael collins of ireland, ambassador ichiro fuj saki from japan and ambassador duk su han of korea. thank you katy o'malley and thank you to the members of the o'malley brown cabinet for your high competence, effectiveness, delivering results and for caring about every citizen that we serve. and thank you to the men and women of the maryland general assembly for putting the best interests of the families of maryland first and for making the right decisions, however tough, however unpopular for the sake of the better future that our children deserve. my fellow marylanders, we are here because we care about people, all people, every

person, every family, and we know that in order to tackle the challenges at hand and get all of our citizens back to work, we must act as a people. five years ago in our first state of the state together i declared before you the goals of this administration, to strongly then and grow our middle class and our families on businesses and family farms. this remains the single overarching indicator of progress for our state and the better future we seek for our children. there is nothing more important for a family's security and future than a job. we are all in this together. and in this important work the state of our state is strong. [ applause ] with tough but fiscally responsible choices we are moving our state forward out of the era of recession, foreclosure and job loss and

into a new era of job creation and greater opportunity for all. we had not yet recovered all the jobs that we lost during the bush recession. but we are moving forward steadily. as president obama stated last week, we must create an economy that is built to last. and in this work, maryland is once again leading the charge for our country's better future. by improving education and harnessing education, by modernizing our portd, openings the intercounty connector, expanding rural broadband, building new schools, modern classrooms and other criticaling infrastructure, by making college and skills training more affordable for more families, we together have strengthened the connections and improved the conditions that allowed businesses to create jobs. expanding opportunity to strengthen and grow our middle class is a choice. and because of your choices, more marylanders are working

this year than last. marylanders like kevin reid of prince george's county are working again because you chose to make modern investments in the economy. after taking the initiative to complete a solar skills training program sponsored by the prince george's county and workforce corporation, kevin land add green job installing solar panels at fedex field, home of our washington redskins. more marylanders are working again because of small business owners like susan aplen who recently moved bam beak co-her home furnishing company from west virginia to baltimore with the support of an investment by the maryland venture fund. and get this, last year susan hired nine new employees. this year she plans on hiring

ten more of our fellow citizens. susan is with us today. susan, raise your hand. there she is. marylanders like jacqueline of brandywine who have been able to save their homes because you've taken action to drive down home foreclosures. listen to this. jacqueline operates a day-care business out of her home. and when the recession hit with fewer and fewer moms and dads able to afford to send their kids to daycare, jacqueline fell behind on her mortgage. at risk of losing both her home and her business, jacqueline tried to no avail to negotiate with her mortgage servicing company. but then she heard one of your advertisements for our state's hope hotline. and through the hotline, she was connected with cairos development corporation, a non-profit in prince george's led by reverend kerry hill. they were able to negotiate a